Ronald Wilson Reagan (Part 94)

https://i2.wp.com/www.reagan.utexas.edu/archives/photographs/large/c40615-18A.jpg

President Reagan attending the Bob Hope Salute to the United States Air Force 40th Anniversary celebration with Kirk Cameron, Phyllis Diller, Lucille Ball and Emmanuel Lewis at Pope Air Force base in Fayetteville, North Carolina. 5/10/87

7:40 PM EDT on November 6, 1984 from ABC7 WLS-TV Chicago.
ABC News – The 84 Vote
Peter Jennings, David Brinkley, Bert Lance – Georgia Dem State Chairman

Lee Edwards of the Heritage Foundation wrote an excellent article on Ronald Reagan and the events that transpired during the Reagan administration,  and I wanted to share it with you. Here is the seventh portion:

There is no denying that American indebtedness increased significantly during the Reagan years. Reagan borrowed $1 for every $5 he spent, increasing the national debt by $1.5 trillion through 1988. He didn’t have to worry too much about where to get the money — America was still such a good credit risk that people around the world “pressed money on us, and we obliged, borrowing easily, quickly, and almost guiltlessly,” in Cannon’s words, [xxi] But Reagan did feel guilty about the accumulated debt or as much as anyone with his unassailable optimism could feel guilty. He admitted that his failures to cut federal spending absolutely and to balance the federal budget were his “biggest disappointments” as president.[xxii]

But it is a little-remembered fact, as Cato Institute economist Stephen Moore has emphasized, that by the end of the Reagan era, the federal deficit as a share of gross domestic product was falling, and rapidly — from 6 percent in 1985 to 3 percent in 1989. As Reagan left office, the Democrat-controlled Congressional Budget Office projected that “deficits were on a path to fall to about one percent of GDP by 1993,” without any action by future presidents.[xxiii]

Reagan never ignored the deficit — he just had more important things on his mind. As he said in 1981, “I did not come here to balance the budget — not at the expense of my tax-cutting program and my defense program.”[xxiv] Still, every budget he submitted to Congress outlined spending reductions which would have reduced the cumulative deficit during the 1980s by several hundred billion dollars. But Congress nullified this possibility with a succession of “continuing resolutions” that enabled the government to keep operating and keep spending at the same level.

The persistent deficits did, however, have an unintended impact on Congress, which for the first time in the post-war era began to “impose limits on the growth of government.” Of all the measures we know, Milton Friedman wrote, “the deficit has been the only effective restraint on congressional spending.”[xxv]

President Reagan devoted most of his time in the spring and early summer of 1981 (after he had recovered from the March 30th shooting by would-be assassin John Hinckley) building a consensus for his economic recovery program. Time’s Lawrence Barrett described the president’s strategy as initial “seduction” followed by a “blitzkreig.”[xxvi] Reagan began by showing the Washington establishment that he was not a dangerous man or a “political freak.” He had drinks with House Speaker Tip O’Neill, a meeting with Senator Edward Kennedy, and a chat with publisher Katharine Graham of the Washington Post. Quite a charmer, they agreed, but certainly no real threat to the way Washington works.

O’Neill was so deceived that he condescendingly offered some advice to the new fellow in town: “You were governor of a state,” he told Reagan, “but a governor plays in the minor leagues. Now you’re in the big leagues. Things might not move as quickly as you would like.” Just eight months later, the House of Representatives passed Reagan’s economic recovery plan by 238-195, with the cross-over help of forty-eight Democrats who didn’t mind going against their Speaker when it was in the best interests of their constituents.

Reagan called Congress’s passage of the bill “the greatest political victory in half a century.” Jubilant conservatives described it as a “new economic beginning.” David Broder of the Washington Post proclaimed Reagan’s tax victory as “one of the most remarkable demonstrations of presidential leadership in modern history.”[xxvii] The $162 billion tax cut dwarfed any previous one in the postwar period — Ford’s $22.8 billion reduction in 1975 was a distant second.

The cuts in personal income taxes “had a permanency unlike that of any [previous] tax bill” because of the indexing provision. In the past, individuals were pushed into higher tax brackets whenever their income rose along with inflation. ERTA did away with “bracket creep” and prevented political leaders from “solving” fiscal deficits by waiting for inflation to increase revenues each year. From now on, Congress had to pass and the president had to sign any tax increase out in the open. How to collect government revenues “became the dominating political issue of the 1980s.”[xxviii]

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